MARTIN Lewis has explained a big change coming for people on benefits – and whether they will be better off.
Around 2.6million are still on older benefits like tax credits which are being replaced by Universal Credit.
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Everyone on six so-called legacy benefits will be moved over to Universal Credit by the end of 2024, the government has said.
Many will move over naturally through a change of circumstances during that time, for instance if they have a baby or change jobs.
Anyone who hasn’t moved over will be invited to eventually under a process known as managed migration.
This kicked off at the start of the month with 500 people in two locations and will gradually be rolled out more widely.
Speaking on the Martin Lewis Money Show, the money saving expert responded to a viewer’s question after they asked if they will be worse off if they make the move.
He said: “I believe 55% of them, according to the Government stats, will be better off moving to Universal Credit, 35% will be worse off and the numbers can be quite a difference
“Those who will be better off tend to be those in work and pay rent, especially in the city who have higher housing benefit type elements or those towards the top-end of Universal Credit.
“Those who will be worse off might be those people who aren’t renting or are out of work.
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“So, if you’re in that category, you may be worse off but you will be automatically moved at some time by the end of 2024 and there is nothing you can do about it.”
But some people will be protected from losing cash in the short term.
Those who are not better off will get transitional payments that top up income on Universal Credit to the same amount as legacy benefits.
But crucially you won’t get this money if you choose to move over to Universal Credit voluntarily – you must wait to be invited to move.
He warned that seeking one-to-one advice is crucial for anyone moving over.
He said: “It’s important to understand when you do make that request as soon as you ask, you’re going to be moved and can’t change your mind.”
“So don’t even rely on a benefits calculator online to check your situation, go and get a one-on-one assessment from a proper qualified free benefits expert and if they tell you that you’ll be better off, you might actually want to apply to Universal Credit sooner.
You should consider carefully what moving over means for your money, as you can’t move back once you’re on Universal Credit.
We spoke to a benefits expert who explained how to get advice on the switch – here’s what he said about how to avoid losing cash.
Checking your benefits
Around 1.4million people will be better off on Universal Credit and could get an extra £220 a month on average.
And around 900,000 WON’T be better off and should wait to be moved so they don’t miss out on cash.
A further 300,000 will see no change to the amount they get, according to government estimates.
Examples of those who may be entitled to less on Universal Credit according to the government include:
- Households getting ESA who and the Severe Disability Premium and Enhanced Disability Premium
- Households with the lower disabled child addition on legacy benefits
- Self-employed households who are subject to the Minimum Income Floor after the 12 month grace period has ended
- In-work households that worked a specific number of hours (eg lone
parent working 16 hours claiming Working Tax Credits) - Households receiving tax credits with savings of more than £6,000 (and up to £16,000)
If you work out that you won’t be better off, then stay put and wait to be moved over through managed migration.
You will get top up payments, known as transitional payments, so you don’t lose cash, but you won’t get them if you move across voluntarily.
If you get a severe disability premium (SDP) you could get extra payments on top of Universal Credit known as a transitional element.
This is the case whether you move over yourself or via managed migration.
A free online benefits calculator can help you check but you should ask for advice too.
You can find them from charities such as Turn2Us and EntitledTo.
Citizens Advice also has a Help to Claim service to support Universal Credit claims.
Martin also highlighted that benefits are not increasing in line with inflation, squeezing income for millions of Brits on benefits.
Inflation is currently 9% and a rise last month to benefit payments was just 3.1%, squeezing millions of people’s finances.
Universal Credit usually rises annually in April along with other benefits based on the inflation rate for the previous November.
The government could increase benefits now instead of waiting for next Spring as part of a package of support to tackle the cost of living crisis.
An announcement is expected today and Chancellor Rishi Sunak could offer a £400 discount on energy bills.
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